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How to get compensation right

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Using information on pay practices for nearly 2,000 global companies, with about 40% representing Asia Pacific, here are five tips on your compensation programmes you can’t miss, from Willis Towers Watson’s Getting Compensation Right survey.

[all data and tips below pertain to employers in Asia Pacific]

1. Clarify factors that determine base pay

Currently, only less than half of companies surveyed in Asia Pacific admit to getting compensation right. The top three challenges to effective pay-for-performance are limited budgets (61%), manager capability (49%), and limited pay differentiation (37%).

Tip: Consider multiple factors when determining base pay:


2. Improve differentiation of short-term incentives

Presently, one-third of employers in Asia Pacific actually pay incentives to employees who do not meet expectations. Further, when actual incentive funding levels fall below target, nearly four in five reduce the payout to top performers rather than other employees.

Tip: Differentiate incentives enough to make them meaningful to different employee groups


3. Use technology to improve decision making

Less than half of organisations use software beyond spreadsheets to support implementation of base pay and to determine short-term incentives both globally and in Asia Pacific.

Such companies that rely on spreadsheets are 50% more likely to say that not having the right technology is a challenge to delivering effective pay-for-performance.

Tip: Make effective use of technology with the right software


4. Prioritise fair pay

Most Asia Pacific companies give themselves high marks for having formal processes to prevent bias and inconsistency in hiring and pay decisions, including: performance reviews (77%), hiring decisions (76%), base pay increases (74%), and starting salaries (74%).

Tip: Make fair pay integral to your compensation programmes


5. Build a culture of pay transparency

Just over two in five employers (43%) are planning to take action within the next three years to increase the level of transparency in pay decisions.

Tip: Make pay transparency a goal of your reward strategy


All images / Willis Towers Watson

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